Bubble Meter is a national housing bubble blog dedicated to tracking the continuing decline of the housing bubble throughout the USA. It is a long and slow decline. Housing prices were simply unsustainable. National housing bubble coverage. Please join in the discussion.

Thursday, December 22, 2005

Housing Bubble Blogs Have Influence

The Bubble Meter Blog uses StatCounter to track site statistics. I have the upgraded account which costs 9$ a month. It logs the stats for the last 1,000 visitors to the site.

StatCounter has a neat feature that tracks which ISPs ( Internet Service Providers) the reader came from. Most of them are the major internet providers like Verizon, Comcast, US West Internet Services which don't tell you much. However, some ISPs where visitors came are trackable to the organization level.

Home Builders ( Pulte Home, another company even posted a link to this site on their intranet)

Some of the visitors from the above organizations were indeed reading the blog for their own enjoyment or personal research. However, surely some of these visitors from these organizations were visiting for work related purposes. The media and others are watching these housing blogs. We must continue to spread the speculative reality of the situation.

"enhanced skepticism that resolutely associates too evident optimism with probable foolishness" - John Glabraith, A Short History of Financial Euphoria

Prices in the bubble markets have NOT reached a "permanently high plateau."

15 comments:

I see almost exactly the same activity. Most interesting is that just about every realtor in Northern NJ visits my site almost daily. Also very interesting (and it may be due to proximity) is that I get about 1/4 of my hits from NYC-based major financial firms (Goldman, JPM, Morgan Stanley, etc).

Also, don't only track the domain, but look at the referring link if the visit was from a site like Google or Yahoo. You'll typically find the search terms used that the user found your site with. Usually about once a week I see searches coming in for real estate professionals and local journalists that I've mentioned in the past. There is a handful of local real estate executives that seem to be very concerned about what I'm saying.

Thanks for the info. I do indeed check check the referring link; that is how I found out about the link to my site from an intranet site for a homebuilder. I will post more about referring links in the future.

Good to hear you are well read. David, I love your site. But as somebody who has a home and is worried about high possibility of a bubble, I'd wish bloggers would post more about how home owners are protecting themselves from going under using hedge instruments, HELOCs, etc.

Like if people really believe in RE for the long term (years) and they have cash on hand, but a high mortgage, what are they doing (I mean the diligent homeowners who are being proactive)?

Any interesting stratgies to hedge, leverage RE that people want to keep for years?

There are secrets that diligent homeowners employ to protect themselves.

First, they buy houses based upon said house's intrinsic value - a place to make a home.

Second, they buy houses with fixed-rate, conventional mortgages. They understand that if they can not afford the payment they can not afford the house.

Third, they understand that houses are places to live, not investment vehicles, like stocks, or soybean futures.

Fourth, they understand that there is no free lunch, that shelter from the elements costs money, but that, over time, a conventional mortgage is paid off and the un-mortgaged asset may hold value for a similar, aspiring home owner - see above.

Finally, they care not a wit what the market will do over the coming five years, and instead of thinking about it, take piano lessons.

dc_too, I agree with your advice but it doesn't fix the problems that Anon is worried about. Even with a fixed rate mortgage, you're still heavily leveraged. Even if you don't want to treat housing as an "investment," it IS an investment, like it or not. It would be nice if there were securities that one could purchase to hedge the "long" position that homeowners must take.

Good Point, Ed. DC_Too, you have good points, but that's before somebody has invested in a home (hindsight being 20-20). And its very conservative- remember that it takes risk to be rewarded. Granted, speculation is one thing- but if its hedged, it could pay off.

i work for a newspaper but that's not why i check out your site. most reporters aren't well paid and we face the same problem of trying to afford a home in inflated markets, too. plus, this is a great blog.

OK, Ed. I apologize for being a smarty pants. However, over a long period of time, the time, say, it takes to raise a family, simple price inflation will nearly always boost, if not the value, at least the price, of a house. That is the beauty of the fixed-rate mortgage - the payment does not increase over time, and eventually pays for the house. Presto, you now own something valuable that you would not have owned had you rented for two decades instead.

Remember, no free lunch. Housing costs money no matter how it is provided, so you've killed two birds with one stone by purchasing an asset with the same money you used to keep the rain out of your bed.

That said, go look at www.hedgestreet.com You can buy (short) mini futures contracts based upon housing prices in many areas. That is one way for a homeowner to bet money on price declines - and don't kid yourself, it is "betting" in the classic sense.

You could also try and find a publicly held homebuilder that operates in your area, like NVR in N. Virginia, and sell short the stock, a bet that their business will deteriorate along with housing prices.

Keep in mind that strategies like this do not provide the advantage that the homeowner enjoys - time. You can't buy (short) a futures contract with a twenty-year time frame - perhaps 6 or 12 months at most. And shorting an otherwise viable homebuilder will work near to medium term - the stock may well bounce back in advance of the next housing upswing and bite you in the, er, shorts. You must "know" when to execute these trades to make them profitable - very difficult.

Nothing is certain in life, but it seems to me the best way to hedge your house is to buy what you can afford, in the best neighborhood possible, and forget the whole thing until the kids are done with college. Don't try and correlate shelter from the elements with other investments. That's my two (and a half) cents.

I hope some of the outlandishly bullish inividuals read these blogs (those from the media- and economists and writers like Steve Kerch, and James Glassman) They may learn something-other then the polyanna propagandized fantasyland they inhabit.

The long list of entities that read blogs, presumably looking for valid information, scares the beegeebers out of me.

It boils down to "The uninformed seeking information from the even more uninformed."

Most bloggers, bless their hearts,talk out of their hats. Most of what we read in blogs is simply someone expressing an opinion, often on topics they know little about. And that's fine, as long as we don't read it as fact.